Real Estate Briefing - Archive | February, 2009

From Propertyeu.info: Global property services firms have expanded too rapidly over the past years with some having fuelled this expansion with short-term debt finance that is proving challenging to re-finance, according to Patrick Curran, managing director of BNP Paribas Real Estate Ireland.

Curran said other firms find themselves in the position of having to go through rights issues at deeply discounted share prices….. Full Article: Source

From Bloomberg: Sales of new homes in the U.S. plunged in January to a record low as soaring unemployment and mounting foreclosures drove buyers away.

Purchases dropped 10 percent to an annual pace of 309,000, the lowest level since data began in 1963, the Commerce Department said today in Washington. The median price decreased 13.5 percent, the most in almost four decades. …. Full Article: Source
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From Europe-re.com: According to the latest study by CB Richard Ellis, European investment market turnover fell significantly in 2008 to €117 billion. Continuing financial turmoil and the deteriorating economic outlook impacted investor demand, translating into a 53% fall in activity year-on-year.
The slowdown was seen across the board, with 24 out of the 25 countries covered registering a decline in transactions. The only exception to this was Russia, where 2008 activity was on a par with the previous year, heavily influenced by a few large deals….. Full Article: Source

From Glgroup.com: The Central and Eastern European property market remains unsophisticated compared to the west with ample opportunities for eager investors. However, current economic events provide both high risks and potentially high rewards…

The retail explosion in Eastern Europe during the past two decades has been considerable but there remain significant opportunities for judicious investment….. Full Article: Source

From BBC: House prices fell by 1.8% in February as confidence in the UK property market failed to pick up, according to the Nationwide building society. The lender said that the average UK property had fallen in value by 17.6% over the past 12 months, to £147,746.

Although cuts in interest rates have made mortgage repayments cheaper for some, this has yet to be seen in increased sales, it said….. Full Article: Source

From Themovechannel.com: German residential property is joining gold as a safe haven for investors disillusioned with equities and afraid other assets will be eaten away in the global economic downturn.

Analysts are predicting that German real estate is increasingly being seen as a long term, low risk investment for institutions worried that the financial crisis is causing soaring inflation….. Full Article: Source

From IHT: The central Rome apartment comes at a 20 percent discount and nobody will find a better bargain in the Italian capital, Francesca Grasso tells her client. The 60 square meter, or 646 square foot, one-bedroom abode is a steal at €195,000, or $249,000, says Grasso, who works for the Top Casa real estate agents in Rome. “You just have to wait a bit,” she says.

By waiting, Grasso means for the owner to die. Deep in the fine print of the sale documents is a number, 88, in parentheses. It’s the seller’s age….. Full Article: Source

From Portfolio.hu: Hungary’s Central Statistics Office (KSH) has on Thursday revealed surprising data about the country’s home market developments in 2008. The number of building permits was exceptionally high in the fourth quarter as if the global financial crisis had not affected local companies at all.

At the same time, other researches show a nearly 40% decline in the sales of developers that generally sell more than ten homes a year. …. Full Article: Source

From Thenational.ae: Property buyers will be able to get full information on whether construction of their homes is on schedule, delayed or has been cancelled, in an initiative designed to protect investors.

The Independent Progress Monitoring Report, an online scheme announced yesterday by the Real Estate Regulatory Agency (Rera), will see government engineers touring Dubai’s housing construction sites to check on the progress being made….. Full Article: Source

From Gowealthy.com: According Marwan Bin Galita, Chief Executive, Real Estate Authority (RERA), the rents of residential properties in Dubai have been declining and could fall up to 40-50% by the end of this year as the market cools off. This comes amid a 45% decline in land transaction value in some areas.

However, contrary to earlier anticipated 31,003 units to come for delivery in 2009, around 20% of residential properties may not be available. …. Full Article: Source

From Reuters: An Abu Dhabi property joint venture company including Aldar Properties and Sorouh Real Estate SOR.AD said on Thursday it would build a $10 billion development in Jordan.

Al Maabar International Investments — which also includes Reem Investments, Reem International and Al Qudra Holdings among its shareholders — said the waterfront real estate and tourism development would be located in Aqaba….. Full Article: Source

From Zawya.com: Bahrain’s government has authorized the nation’s Ministry of Housing to issue bonds worth nearly US $ 800 million to finance housing projects in Bahrain.

Bahrain’s Minister of Housing, Sheikh Ibrahim bin Khalifa Al Khalifa, said during an interview on CNBC Arabiya that financial institutions will issue the bonds in segments over the next six months. …. Full Article: Source

From Asiaone.com: The market capitalisation of Asian real estate investment trusts (Reits) shrank by almost a third in the second half of last year compared with the first half, as unit prices of Reits dived and new listings dried up.

Singapore Reits took one of the worst beatings, with market cap declining 53 per cent between June 30 and Dec 31 last year, CB Richard Ellis’ (CBRE) data shows….. Full Article: Source

From Financeasia.com: The prospects for Hong Kong’s residential property market look bleak: investors are put off by the decrease in rents and homeowners have lost confidence due to rocketing levels of unemployment. Wednesday’s budget might have provided a minor positive, but there is little chance of a rebound in the near term.

Key indicators, such as transaction levels and rent prices, are down. According to property agent Ricacorp, there were just 561 transactions in the 50 housing estates that it tracks in the first half of February, a reduction of 21.9% from the same period in January….. Full Article: Source

From Chinadaily.com.cn: The latest figures from 12 listed real estate companies reveal a sharp drop in income from property presales during 2008, indicating a further earnings decline this year.

A practice borrowed from Hong Kong, the presale of apartments under construction has become an established mechanism in the mainland property market to speed up the capital flow of developers….. Full Article: Source

From Hurriyet.com.tr: Asia Commercial Bank, Vietnam’s biggest listed company by market value, yesterday opened its first property exchange and valuation unit in Hanoi to tap rising demand, the bank, known as ACB, said in an e-mailed statement.

The Hanoi property exchange will bring the number of ACB’s real estate trading floors to six, according to the statement….. Full Article: Source

From Indiatimes.com: Real estate companies and developers have undertaken ambitious debt restructuring exercises to improve their financial situation as tight iquidity situation crimps house-buying decisions and debt-equity ratio of companies crosses the prudent level of 0.5. The debt-equity ratio of many property firms currently ranges from 1 and 1.5.

The domestic real estate market has already seen private equity firms buying strategic stakes in holding companies, sale of land banks and non-core businesses, pledging of promoters’ equity for long-term debt and securitising of future receivables for their working capital requirements. …. Full Article: Source

From Koreatimes.co.kr: The government-evaluated prices of real estate nationwide, the basis by which property taxes are calculated, have dropped 1.42 percent this year from a year ago, the first fall since the peak of the currency crisis in 1999.

But Incheon property prices gained 16.8 percent over the past year, meaning further reductions in tax burdens for property owners, who have already benefited from a series of softened tax rules…. Full Article: Source

From Businessspectator.com.au: Australian villa owners say Bali’s property market is more resilient than that in their own country, as the global financial crisis worsens. The island’s villa market has experienced exponential growth in recent years amid record tourism numbers, with villas in prime locations going for up to $US3 million ($A4.62 million) off-the-plan.

Asia-based expatriates seeking a holiday home cum rental property have driven the buying. With foreigners banned from bank financing, they pay cash, giving Bali some
insulation from the credit crunch hurting other markets, property agents said. …. Full Article: Source

From IPE: The Ontario Municipal Employees Retirement System (OMERS) suffered an overall net loss of $8bn (€6.25bn) in 2008, although its real estate investments performed relatively well despite the financial downturn.

OMERS announced on Monday it generated a -15.3% rate of return on its investments in 2008 compared to an 8% return recorded the previous year, but its property and private market assets, and its limited exposure to high-risk investments like sub-prime mortgages and over-leveraged assets, helped lessen the pension fund’s losses….. Full Article: Source

From Timesonline.co.uk: Liberty International, the UK’s biggest owner of shopping malls, may need to raise £350 million to avoid breaching its bank covenants as it is hit by retail insolvencies and declining property values. In some UK high streets, about 15 per cent of shops now stand vacant.

The owner of the Metro Centre in Gateshead and co-owner of the Earls Court exhibition centre in London, Liberty raised the possibility of a rights issue last week and added yesterday that it may need at least £350 million of equity. …. Full Article: Source

From Morningstar.com: We’ve decided to increase the fair value uncertainty ratings for many of the real estate investment trusts that we cover to better account for the wide range of possible outcomes for these firms over the next few years.

In the fourth quarter of 2008, we moved our entire coverage universe of 68 REITs to either high or very high uncertainty as it became clear that falling asset values and excessive leverage in most property types was a toxic combination. Given recent signs of additional distress, we’re moving 21 companies to very high uncertainty from high….. Full Article: Source

From Watoday.com.au: Australian property developers Westfield Group, Centro Properties Group and Lend Lease Corp. reported $5.25 billion in losses today as the global recession wiped billions off the value of assets and retail sales plunged.

Westfield, the world’s largest shopping-center owner by market value, reported a net loss was $2.2 billion in 2008, from a profit of $3.4 billion a year earlier. Centro, with more than 70% of its assets in the US, said its first-half loss doubled, while Lend Lease, building London’s Olympic Village, lost $596.4 million in the period….. Full Article: Source

From Timesonline.co.uk: Homebuyers can look forward to better mortgage deals in “a matter of weeks” after an announcement by Northern Rock that it would inject £14billion of funds into the housing market in the next two years.

The Treasury says that the plan, which could make available an extra £5billion this year and £9billion in 2010, is likely to benefit first-time buyers and home movers who are looking to take advantage of lower house prices. …. Full Article: Source

From CNNMoney.com: Hammered by the ailing housing market, mortgage finance giant Fannie Mae said Thursday it would tap its lifeline from the Treasury Department after reporting $58.7 billion in losses for 2008.

The company, a crucial source of funding for mortgage lenders, said it would draw down $15.2 billion of its $200 billion federal line of credit. In return, the government will receive preferred shares….. Full Article: Source

From Propertyfundsworld.com: San Francisco-based Forward Management, investment adviser to the Forward Funds, will add the Kensington Funds from the Kensington Investment Group to the Forward Funds series.

The addition, pending shareholder approval in April, would create a combined fund family offering investors 35 mutual funds in no-load and load-share classes with more than USD3.7bn in assets under management….. Full Article: Source

The Eco-Ledger tool will use the IPD Environmental Code, launched a year ago to set out IPD’s methodology for collecting environmental performance data, and offer users key performance indicators and benchmarks for their properties’ energy consumption, carbon emissions, water use, waste and recycling….. Full Article: Source

From Privateequityrealestate.net: The California State Teachers’ Retirement System is preparing to buy securities held by distressed sellers as well as non-distressed, discounted debt across all asset classes in an effort to take advantage of the financial market turmoil.

The $119 billion pension is planning to create a $6 billion “equity return” portfolio that will focus on distressed securities sellers, distressed-priced debt and high-yield bonds with returns of 15 percent or more. The portfolio, CalSTRS said in board documents, would hold assets from various classes like private equity, real estate and fixed income….. Full Article: Source

From Bizjournals.com: U.S. home sales dropped sharply last month, while the inventory of houses on the market plummeted to a two-year low, according to figures released Wednesday by the National Association of Realtors.

Sales of existing homes fell 5.3 percent from December to January, slipping to an annualized rate of 4.49 million units….. Full Article: Source

From FT: Home prices in big US cities dropped at a record rate last year as slumping sales and rising foreclosures hammered the housing market.

The fall of 18.5 per cent in the year to December in the Case-Shiller index was the biggest fall since the measure, published by Standard and Poor’s, started 21 years ago. House prices have now fallen to levels last seen during the third quarter of 2003….. Full Article: Source

From Reuters: The U.S. housing market slump is nowhere near over and home prices will probably keep falling well into next year, one of the property market’s best-known economists said.

Karl Case, the co-developer of a widely watched gauge of the housing industry, told Reuters that the hard-hit U.S. housing market has gone from being the primary source of the U.S. economic recession to one of its biggest casualties….. Full Article: Source

From Forbes: The cities that are showing signs of stabilization and those that continue to unravel. The S&P/Case-Shiller home price index, released monthly, examines repeat home sales in 20 metro markets, including the city core and surrounding suburbs.

This means that while prices in tony San Francisco neighborhood Pacific Heights might be holding up, the net effect of including a bankrupt suburb like Vallejo brings down the metro area’s score. Each city’s score is assigned based on the price difference from 2000, which is scored as 100….. Full Article: Source

From Calgaryherald.com: Canadian residential real estate activity should moderate further in 2009 alongside a general weakening in domestic economic conditions, says a research report released today by Scotia Economics.

The Real Estate Trends, authored by economist Adrienne Warren, said Canada can expect a 15-20 per cent decline in the volume of resales this year with a further 10 per cent drop in average prices….. Full Article: Source

From Europe-re.com: Despite a weakened European commercial property investment market in 2008, sales of commercial real estate by occupiers remained an important source of activity last year.

Although there was a sharp fall-off in the amount of public sector real estate sold in 2008, owner-occupier sales maintained their approximately 19% share of the total investment market in 2008, according to figures released by CB Richard Ellis (CBRE)….. Full Article: Source

From Businessweek.com: With the lingering downturn and dearth of credit, many of London’s office building projects have been delayed or put on hold. This was the year London’s skyline was supposed to be transformed by the construction of yet more signature skyscrapers.

But with funding increasingly hard to come by and fears that demand for office space will continue to drop, many such projects have now been delayed or shelved. Commercial property values fell by 3.5% in January, on top of a 27% decline in 2008, according to global property advisers CB Richard Ellis (CBG). …. Full Article: Source

From Hotproperty.co.uk: Slump in Property Worst for 50 Years The number of property contracts being exchanged fell in January to their lowest levels since 1959, despite mortgage approval rates improving from last year.

The statistics suggest that the recession has reached a new low, and is far worse than ever predicted. HM Revenue & Customs has published figures that show 43,000 properties with a value of £40,000 or more were sold last month, a new record low….. Full Article: Source

From Europe-re.com: IPD today published the SFI / IPD Swedish Annual Property Index for 2008. According to the index, total returns for the year fell to -3.3%, a substantial fall from the 14.7% return achieved in 2007. Swedish property outperformed equities but lagged behind bonds, which returned -39.5% and 15.7% respectively.

The main driver of these poor returns was a significant rise in yields of 13.3% or 69 basis points over the 12-month period….. Full Article: Source

From Investorschronicle.co.uk: Central and eastern European economies are in danger of financial collapse, with dire implications for the region’s property markets. Hungary’s residential property market threatens to destabilise its entire economy as almost every residential mortgage is in a foreign currency - typically Swiss francs.

The Hungarian forint has slumped in value and high levels of consumer default seem inevitable….. Full Article: Source

From Gulf-times.com: The value of Dubai real estate transactions so far this year has fallen 45% to 14.7bn dirhams ($4bn) from AED26bn in the first two months of 2008 as the emirate’s property sector struggles amid the wider global financial crisis, the land department said yesterday.

“The total value of real estate transactions in the first two months of 2008 was AED26bn. So far this year we’ve seen AED14.7bn,” Mohammed Sultan Thani, assistant director-general of Dubai land department told a press conference. The value of sales in January and February, meanwhile, fell 40% to AED7.6bn from a year earlier, Thani said. …. Full Article: Source

From Khaleejtimes.com: Real estate officials are planning steps to shore up confidence after early indications suggested that property developers could cancel as much as 20 per cent of all residential and commercial projects in Dubai.

The Real Estate Regulatory Authority (RERA) would carry out inspections on all 695 registered developments to see which ones have been put on hold in the face of the global economic crisis, the agency said on Wednesday….. Full Article: Source

From Reuters: Dubai developers have access to up to $2.2 billion from escrow accounts to cover construction commitments, the emirate’s property regulator said in a strategy report released on Wednesday.

Several Dubai-based contractors have said they are owed hundreds of millions of dirhams by state-linked developers and some may face bankruptcy as credit dries up….. Full Article: Source

From Usatoday.com: Mohammed Aziz remembers back when he would come to his office and spend days without a single customer opening the door. The real estate broker would sit in the office with colleagues and relatives, wondering when the raging violence outside would ease up enough so people would get back to buying and selling homes.

“In 2005 and 2006, it looked like a ghost city,” said Aziz, pointing out toward the street bustling with reopened shops and heavy traffic. “Nobody came. We would come and sit and read newspapers….. Full Article: Source

From Propertyshowrooms.com: South Africa’s property market is struggling to recover from the economic downturn, despite not being hit as badly as some other international real estate sectors, a new report has revealed.

According to Colliers International, issues such as power outages, the lack of liquidity and weak household demand are limiting the growth of the property market in the country….. Full Article: Source

From Bloomberg: DLF Ltd. and other Indian developers are cutting prices on increasing risks that buyers will back out of purchases made at the market’s “peak,” forcing developers to write off earlier profits, Credit Suisse Group said.

DLF, along with Parsvnath Developers Ltd. and Orbit Corp., have more than 20 percent of their revenue booked since 2006 as outstanding, Mumbai-based analyst Anand Agarwal wrote in a report today. The company, India’s largest real-estate company, has lowered prices for a project in Chennai by as much as 14 percent, the report said. …. Full Article: Source

From Hindustantimes.com: Real-estate prices across the country have fallen by 10-40 per cent. And while prices vary depending on location, size, quality, amenities and time of possession, there are clear indications that the earlier price surge created by speculation and high growth has petered down.

Developers are generally still not cutting prices of existing projects, but they face a market in which re-sales could do much the same thing….. Full Article: Source